Startup Finance

Startup Equity Dilution Calculator

Founders, don't get crushed by VC math. Calculate exactly how much ownership you will lose in your next funding round.

Term Sheet Details

Valuation before the new money enters.

The actual cash entering the bank.

Usually 10% to 15% mandated by VCs.

Usually 100% before the Seed round.

Post-Money Cap Table

Your New Ownership

70.00%

Paper Value: ₹3,50,00,000

New Investor Stake20.00%
ESOP Pool10.00%
Post-Money Valuation₹5,00,00,000

The ESOP Trap: Why Founders Lose More Than They Think

  • Pre-Money vs Post-Money: If you raise ₹1 Cr on a ₹4 Cr Pre-Money valuation, the Post-Money valuation becomes ₹5 Cr. The investor owns 20% (1Cr / 5Cr), not 25%.
  • The ESOP Shuffle: VCs will almost always mandate that a 10% to 15% Option Pool (ESOP) for future employees be created before their money enters (in the pre-money). This means the founders absorb 100% of the dilution for the ESOP pool.
  • The Math: If you own 100%, and an investor takes 20%, you should have 80% left. But because they forced a 10% ESOP pool into the pre-money, you actually only have 70% left!
  • Rule of Thumb: Every time you raise money, expect to lose 20% to the investor and another 10% to the ESOP pool. By Series B, most founders own less than 40% of their company.